This marks the strongest show of faith till date by Infy's board in the former SAP exec’s ability to restore its former standing as India's IT bellwether.Anirban Sen | ET Bureau | Updated: February 25, 2016, 08:14 IST

India’s second largest software exporter Infosys, which on Wednesday rewarded chief executive Vishal Sikka with an extended tenure for helping the former sector bellwether regain industry-leading numbers this fiscal year, has given the former SAP product chief a bumper raise in annual compensation, elevating him to an elite global club of tech CEOs.

As part of the new proposed compensation structure, Sikka stands to make about $11 million every year, starting January 2017.

Infosys has rewarded Sikka with a significantly higher component of stock options and reduced the part of his salary that was linked to variable pay. As part of his old contract, Sikka made $7.08 million, including stock options.

“Just as the company’s 2015 Stock Incentive Compensation Plan will increase the use of equity compensation to motivate and retain other senior executives, Dr. Sikka’s new contract of employment will rely more on equity compensation and less on cash compensation to motivate and retain him. The Committee retained an independent consultant to assist with benchmarking Dr. Sikka’s target levels of compensation to those of other non-founder CEOs at global technology companies of roughly comparable size and scale,” Infosys said in filing to stock exchanges late on Wednesday.

The latest moves by Infosys, which during the 90s quickly rose to become one of the most admired companies in the country, marks the strongest show of faith till date by the company’s board in the former SAP executive’s ability to restore Infosys’s former standing as the bellwether of India’s $160 billion IT industry.

"Vishal has been able to provide Infosys a clear vision and strategy towards achieving industry leading financial performance. During the current financial year, we have seen our strategy execution beginning to show results and thereby laying the foundation for the 2020 goals articulated by the management. To ensure that the momentum that has started is sustained through 2020, the board has decided to extend the contract term and revise the CEO compensation to align it with global benchmarks in the industry. The new compensation structure also ensures a strong alignment between company performance and larger shareholder interests," said R. Seshasayee, Chairman of the Board of Infosys in an email to ET.

Sikka’s new pay package includes an annual base pay of $1 million and variable pay of $3 million. This compares to the $5.08 million he was making from base and variable pay as part of his old contract.

However, Sikka stands to make big bucks from stock options which form the core of the newly-formulated contract. As part of the revised agreement, Sikka is eligible to receive a whopping $7 million in stock options -- which includes restricted stock units as well as performance-linked equity and options. This is more than three times the stock options he was granted in his previous contract.

ET had first reported on Wednesday that Sikka’s new compensation structure could include as much as 50-60% of stock options and be at par with salaries of top executives at companies such as Accenture.

The new compensation structure and the extension of Sikka’s tenure has been realigned to give him maximum bandwidth to effectively focus on the company’s long-term goal of touching $20 billion in revenue by 2020, according to an executive who requested anonymity.

“If Dr. Sikka’s performance targets are overachieved, the performance-based payments for variable components of his compensation (variable pay and Performance Equity) will be capped at 150% of the target compensation for such variable components,” Infosys said in the filing.

Other than the revised pay package, Sikka will also enjoy other normal employee benefits and paid vacations, along with reimbursements related to business expenses, Infosys said.

On the flip side, Sikka stands to make only $3 million annually if he fails to achieve his minimum targets.